COMMISSIONER OF INCOME TAX Vs. DELTRON LTD.

JUDGEMENT

(1.) IN this appeal under Section 260A of the Income Tax Act, 1961 ("the Act"), the Revenue is aggrieved by an order dated February 6, 2006, passed by the Income Tax Appellate Tribunal ("the Tribunal"), Delhi Bench "E", in I.T.A. No. 4115/Del/2002, relevant to the assessment year 1999 -2000.

(2.) THE issue that is before us is whether the assessed had incurred a capital expenditure of Rs. 87,22,447 on purchase of axial machine along with machinery spares and computers which was claimed as a research and development expenditure allowable under Section 35(1) of the Act.

(3.) ON appeal, the Commissioner of Income Tax (Appeals)("the CIT (Appeals)"), noted that Section 35(3) of the Act, prior to its substitution by the Finance Act, 1999, with effect from April 1, 2000, required an issue of this nature to be referred to the prescribed authority whose decision would be final. The prescribed authority in so far as for determining whether the asset is or was being used for research and development was the Department of Scientific and Industrial Research in the Ministry of Science and Technology. The Commissioner of Income Tax (Appeals), Therefore, held that the Assessing Officer could not have disallowed the expenditure without following the said procedure.